PRINCIPLES OF

MANAGEMENT
1

INSTRUCTOR:
DR. AMIR IKRAM
IB&M UET LAHORE
AMIRIKRAM12@HOTMAIL.COM
W W W. A M I R I K R A M 1 2 . B L O G S P O T . C O M
 2

Principles of
Management

Management; Planning
Learning Objectives
 Define the nature and purpose of planning
 Classify the types of goals organizations might
have and the plans they use
 Compare and contrast approaches to goal-
setting and planning
 Discuss contemporary issues in planning

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 What Is Planning?
3

Planning:
First of the management’s functions.
a primary managerial activity that involves:
 Defining the organization’s goals
 Establishing an overall strategy for achieving those goals
 Developing plans for organizational work activities

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 Formal Planning
4

Formal planning
 Specificgoals covering a specific time period
 Written and shared with organizational members

 Pakistan’s 5 Year plans from 1960-1965 and

1965-1970 stand out to be spectacular.

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 Why Do Managers Plan?
5

Purposes of Planning
 Provides direction
 Reduces uncertainty
 Minimizes waste and redundancy

 Sets the standards for controlling

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 Planning and Performance
6

Formal planning is associated with:

 Higher profits and returns on assets
 Positive financial results

 The quality of planning and implementation

affects performance more than the extent of
planning
 The external environment can reduce the impact
of planning on performance

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 Elements of Planning
7

Goals (also Objectives)

 Desired outcomes for individuals, groups, or entire
organizations
 Provide direction and evaluation performance criteria
Plans
 Documents that outline how goals are to be accomplished
 Describe how resources are to be allocated and establish
activity schedules

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 Types of Goals
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Financial Goals - related to the expected

internal financial performance of the
organization.
Strategic Goals - related to the
performance of the firm relative to factors in
its external environment (e.g., competitors).

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 Types of Plans
10

Breath-wise
Strategic Plans
 Establish the organization’s overall goals

 Seek to position the organization in terms of its environment

 Cover extended periods of time

Operational Plans
 Specify the details of how the overall goals are to be achieved
 Cover a short time period

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 Types of Plans
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Time-Frame
Long-Term Plans
 Time frames extending beyond three years.
Short-Term Plans
 Time frames of one year or less.

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 Types of Plans
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Specificity
Specific Plans
 Plans that are clearly defined and leave no room for
interpretation.
Directional Plans
 Flexible plans that set out general guidelines and provide
focus, yet allow discretion in implementation.

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 Types of Plans
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Frequency of use
Single-Use Plan
 A one-time plan specifically designed to meet the need of a
unique situation.
Standing Plans
 Ongoing plans that provide guidance for activities performed
repeatedly.

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 Traditional Goal Setting
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Broad goals are set at the top of the organization.

Goals are then broken into sub-goals for each
organizational level.
Goals are intended to direct, guide, and constrain
from above.
Goals lose clarity and focus as lower-level
managers attempt to interpret and define the
goals for their areas of responsibility.

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 The Downside
of Traditional Goal Setting
15

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 Maintaining the Hierarchy of Goals
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Means-Ends Chain
 The integrated network of goals that results from
establishing a clearly-defined hierarchy of organizational
goals.
 Achievement of lower-level goals is the means by which to
reach higher-level goals (ends).

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 Management By Objectives (MBO)
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Specific performance goals are jointly determined

by employees and managers.
Progress toward accomplishing goals is
periodically reviewed.
Rewards are allocated on the basis of progress
towards the goals.

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 Management By Objectives (MBO)
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Key elements of MBO:

 goal specificity
 participative decision making

 an explicit performance/evaluation period

 feedback

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 Steps are involved in a typical MBO program
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 The organizations overall objectives and strategies are formulated

 Major objectives are allocated among divisional and departmental units.
 Unit managers collaboratively set specific objectives for their units with
their managers
 Specific objectives are collaboratively set with all department members
 Action plans, defining how objectives are to be achieved, are specified
and agreed upon by managers and employee
 The action plans are implemented
 Progress toward objectives is periodically reviewed, and feedback is
provided
 Successful achievement of objectives is reinforced by performance based
rewards
 Does MBO Work?
20

Reason for MBO Success

 Top management commitment and involvement
Potential Problems with MBO Programs
 Are less effective in dynamic environments that require
constant resetting of goals
 Overemphasis on individual accomplishment may create
problems with teamwork
 Allowing the MBO program to become an annual paperwork
shuffle

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 Characteristics of
Well-Written Goals

Goals must be SMART

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 Steps in Goal Setting
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1. Review the organization’s mission statement.

Do goals reflect the mission?
2. Evaluate available resources.
Are resources sufficient to accomplish the mission?
3. Determine goals individually or with others.
Are goals specific, measurable, and timely?
4. Write down the goals and communicate them.
Is everybody on the same page?
5. Review results and whether goals are being met.
What changes are needed in mission, resources, or goals?

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 Contingency Factors in Planning
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Manager’s level in the organization

 Strategic plans at higher levels
 Operational plans at lower levels
Degree of environmental uncertainty
 Stable environment: specific plans
 Dynamic environment: specific but flexible plans
Length of future commitments
 Commitment Concept: Current plans affecting future
commitments must be sufficiently long-term in order to meet
those commitments.

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 Planning in the Hierarchy Organizations

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 Approaches to Planning
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Establishing a formal planning department

 Create a group of planning specialists that help managers write
organizational plans.
 Planning is a function of management; it should never become
the sole responsibility of planners.

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 Approaches to Planning
26

Involving organizational members in the process

 Plans are developed by members of organizational units at
various levels and then coordinated with other units across the
organization.

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 Criticisms of Planning
27

 Planning may create rigidity.

 Plans cannot be developed for dynamic environments.

 Formal plans cannot replace intuition and creativity.
 Planning focuses managers’ attention on today’s
competition—not tomorrow’s survival.
 Formal planning reinforces today’s success, which may
lead to tomorrow’s failure.
 Planning isn’t enough.

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 Planning in Dynamic Environments
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Develop plans that are specific but flexible.

Understand that planning is an ongoing process.
Change plans when conditions warrant
alterations.
Persistence in planning eventually pays off.
Flatten the organizational hierarchy to foster the
development of planning skills at all
organizational levels.

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